What workers want

Businesses are having trouble keeping up with the changing attitudes of the new economy workforce, and nowhere is that more apparent than in employee benefit departments.

Businesses are having trouble keeping up with the changing attitudes of the new economy workforce, and nowhere is that more apparent than in employee benefit departments.

Many Chicago-area companies are offering benefits packages that are out of sync with what workers say are important considerations, according to a Crain's Chicago Business survey of employee attitudes. [Scroll down for survey results.] That gap could hurt companies' ability to compete for talent.

New-wave benefits such as flexible hours, working from home, day care, lactation rooms and sabbaticals are desired more than available, the survey says. At the same time, old-line benefits including life insurance, dental coverage, prescription coverage and disability insurance are more widely available than desired.

The findings underscore a modest but growing shift in benefits management away from cookie-cutter plans to individualized offerings that enable workers to choose which benefits are right for them. Offering more choices helps businesses attract and retain hard-to-find talent in an increasingly diverse workforce.

"If companies aren't offering flexibility in benefits, employees will exercise their flexibility to leave," says Ronald Sipiora, senior-vice president at Chicago-based Aon Consulting Inc., a unit of insurance company Aon Corp. "The 24-year-old has very different needs from the 55-year-old. If organizations try to design one-size-fits-all, they won't meet anybody's objectives."

The results of the workplace survey, conducted exclusively for Crain's by Leo J. Shapiro & Associates LLC between March 30 and April 10, suggest a workforce ripe for a change in the design and management of benefits plans.

The Chicago-based market research firm drew from a sample of 304 households in the five-county Chicago area and interviewed by telephone 246 full-time employees and 58 people working in their own businesses.

According to the findings, a large majority of Chicago-area workers view health insurance and retirement plans as the two benefits they can't live without. But after that, the value employees put on various benefits varies widely.

Yvonne Williams was working at Sony Corp. when her life was turned upside down by divorce. Despite providing a rich menu of benefits, the consumer electronics company fell short when it came to offering the support Ms. Williams needed to navigate the emotional and financial turmoil she encountered. The experience forced Ms. Williams to become more self-reliant and prompted her to encourage companies to offer planning seminars to educate their workers on how to best manage their finances and benefits.

"I'm not depending on the company to direct me," says Ms. Williams, a 43-year-old technology project manager now employed at the Downers Grove office of Hanover, Md.-based TEKsystems Inc. "I'm taking it into my own hands. You have to."

Ms. Williams' experience echoes a movement among human resources experts aimed at giving workers more power to purchase  either with their own money or token company dollars  those benefits that best fit their lifestyles or their circumstances.

While the notion of flexible benefits has been around for more than a decade, few companies have taken the next step: assigning monetary values to the burgeoning array of lifestyle benefits and allowing employees to trade or buy what they need. A working mom may trade eye care coverage for extra vacation days, or a mid-career accountant may swap some stock options for higher tuition reimbursement.

Only 10% of global corporations offer customized benefits, according to Valhalla, N.Y.-based consulting firm Towers Perrin. But the figure is expected to jump to 60% by 2003. "It gets employees to understand the value of their benefits and creates more of a tie to the organization," says Thomas Kuhlman, principal at the Chicago office of Towers Perrin. "There is a positive correlation between choice and satisfaction."

Basic needs

The Crain's survey finds that employee satisfaction increases in tandem with the number of benefits offered. Among the companies surveyed, the average number of benefits offered is about a dozen. Nonetheless, satisfaction drops off sharply when a company offering a large number of benefits fails to provide strong "core" benefits, such as health coverage and retirement plans.

Among workers whose company fails to offer a strong set of core benefits, only 68% characterize themselves as "satisfied." In contrast, 90% of workers employed at companies with a complete set of core benefits are satisfied.

The survey shows no correlation between benefits and job performance.

"This finding implies that benefits play a role in competing for and retaining employees, but they play little or no role in determining how hard people work," says Leo J. Shapiro Chairman George Rosenbaum, who oversaw the survey. Still, benefits that help workers better manage their personal lives improve productivity indirectly by keeping employees more focused while at work. Indeed, the Crain's survey finds workers calling for more benefits that help them balance their job and family lives.

One example: Paid maternity leave ranks high on the list of "must-have" benefits, with 58% of respondents ranking it a "9" on a nine-point scale of importance, making it the third-most-popular benefit after health insurance at 85% and retirement benefits at 74%.

Yet, only slightly more than half of the companies in the survey offer paid maternity leave.

Likewise, employees rank flexible hours and day care as more important than such traditional offerings as life insurance and profit-sharing plans.

"Life insurance is a benefit that's been on the books forever," says Mr. Sipiora. "It's something that's easy for companies to manage and judge. But the truth is, it doesn't get workers excited. It's just not highly valued."

John Ward, a technology manager at J. P. Morgan Chase & Co.'s North American offices in Chicago says that, as a former independent consultant, he had to research and purchase his own benefits. Now, the feast of benefits he receives from the New York-based investment house helps him to be more productive. He takes advantage of the firm's flexible-hours policy to work from his southwest suburban home one day a week, eliminating the commute into the Loop and enabling him to spend more time with his family. And he has one place to go for medical care, retirement planning, tuition reimbursement and just about anything he needs.

"Without those things, I wouldn't be able to do as much for the firm," says Mr. Ward.

Employer benefits, too

As the economy slows, discovering what benefits workers value most can help companies allocate spending more efficiently while also satisfying workers eager for a choice, experts say. In fact, the ability to choose is a benefit in itself. "Companies don't ask often enough what employees want," says Karen Cates, an assistant professor of management and organization at Northwestern University's Kellogg Graduate School of Management. "There may be a lot of things offered to reach as many people as possible, but in the end, you're not satisfying all the workers, and it's probably costing the company money."

To be sure, employees aren't always sure what they need. Crain's survey discovered that many workers don't realize how much they would use a benefit until it becomes available. For example, 79% of workers use flexible hours, even though only 58% rank the offering as a must-have. Similarly, 64% of employees use stock-purchase plans, while only 40% rate the benefit a must-have. And more than half take advantage of work-at-home schedules, matching charitable contributions and concierge services, while far fewer rate those benefits as must-haves.

Overall, 79% of workers say they are satisfied with their benefits, with 32% "completely satisfied" and 47% "somewhat satisfied." Of the 20% of workers unhappy with their benefits, 13% are "somewhat dissatisfied" and 7% "very dissatisfied."

Women are happier with their benefits than men, and older workers more content than younger workers. Specifically, 84% of women surveyed say they are satisfied, compared with 75% of men. And 75% of those under age 35 are satisfied, compared with 82% of 35-to-49-year-olds and 84% of workers 50 or older.

Not surprisingly, employees who didn't get a raise last year, whose benefits were cut or who describe themselves as working "as hard as possible" are more likely to be dissatisfied with their benefits.

What would it take to make dissatisfied workers happier with their benefits? In response to an open-ended question, one-third of workers surveyed say they want better health insurance coverage, including lower costs and a wider choice of doctors. About 21% say they want a raise in pay, and 14% say they want more extensive retirement and 401(k) plans.

The desire for better core benefits along with more new economy rewards is typical, says Timothy Moen, head of human resources at Chicago's Bank One Corp. In the move to offer more choices, companies would do well to remember that a bigger menu alone won't make employees happier, he says.

"It's critically important to give employees choices. It helps drive employee satisfaction," Mr. Moen says. "But just because a company offers flexible benefits doesn't necessarily mean the employee gets everything. The focus ought to be more on the menu you allow employees to select from."

Traditional benefits can be regarded as the foundation of a good rewards program, says Dawn Di Leo, human resources consultant in the Chicago office of New York-based William M. Mercer Inc. But companies need to go beyond that if they want to attract and retain more sought-after workers.

Says Towers Perrin's Mr. Kuhlman: "We're in for a period of a lot of experimentation over the next couple of years, as companies make sure what they're doing is not only competitive but cost-effective and fits their workforce. The issue of choice is more significant now then ever."

MUST-HAVES

As part of a survey conducted by Leo J. Shapiro & Associates, workers were asked which employee benefits they consider critical.